Daniel G. Jacobs
First job: Internal auditor, Beatrice Foods Co.
Career moves: Beatrice Foods Co. (audit manager) to McMaster-Carr Supply Co. (various management positions) to Gander Mountain Inc. (various management positions, including controller) to J.C. Whitney & Co. (CFO, currently president and CEO). Also, executive vice president and general manager of Automotive Specialty Accessories and Parts Inc. (holding company for J.C. Whitney and Stylin Concepts Inc.)
Boards: ASAP Inc., J.C. Whitney & Co., The GILD (a charity board associated with the University of Illinois-Chicago)
What is the greatest business lesson you've learned?
It's all about the people. Getting the right people into the right positions. That's the key.
What is the greatest business challenge you've faced, and how did you overcome it?
The biggest challenge I've encountered was in the transition in selling from a private company to a leveraged buyout firm -- how to manage through all the different people's expectations -- the sellers, the buyers and the employees. And making sure everybody stayed on course with what we were trying to accomplish, which was growth of the J.C. Whitney business.
It's all in the communication. It's what and how you communicate to the people involved in the process -- buyers, sellers and employees -- a lot more face-to-face. It's a lot of discussion with people, explain to them what we're doing, what's the ultimate objective and how we're going to get there -- a lot more team meetings.
Whom do you admire most in business and why?
Andy Grove from Intel. He's got the right kind of perspective. He's not paranoid, but he's constantly considering who's trying to steal his business and what he's going to do to stay ahead of them.
To the uninitiated, listening to the jargon spoken by those who love to repair and modify their vehicles is like listening to a foreign language. And for those who need an improved constant velocity joint boot kit or halogen driving and fog lights with seven-color LED rings (because, let's face it, six is just not enough), the J.C. Whitney catalog is the place they turn to for materials to repair or enhance their ride.
That suits Tim Ford, the company's president, just fine. And while his expertise is in direct marketing, Ford also knows his way around under the hood -- at least a little.
"I've done enough to be dangerous," Ford says. "But I don't do any of the heavy stuff. I'm considered a light DIYer. I can do the oil. I can do the brakes. But I can't do an engine repair."
That's OK, because J.C. Whitney, the largest direct mailer of aftermarket auto parts and accessories in the United States, doesn't need Ford to roll up his sleeves and hop under the hood. The company -- one of three enterprises within Automotive Specialty and Parts Inc., a holding company which belongs to leveraged buyout firm The Riverside Co. -- simply needs him to devise J.C. Whitney's vision and implement it.
Ford, who also serves as vice president of Riverside's automotive holding company, arrived at J.C. Whitney from outdoor specialty retailer Gander Mountain Inc. in 1995 as its CFO, just around
An aftermarket empire
J.C. Whitney was founded in 1915 by Israel Warshawsky, who launched it as Warshawsky Co., a scrap metal yard on Chicago's South Side. Two decades later, he launched the catalog side of the business.
But Warshawsky's son, Roy, thought the family's Lithuanian roots might make landing customers more difficult outside Chicago, so Israel came up with a neutral name, J.C. Whitney.
"Both entities were really one, but they kept both names until 1997," Ford says.
In 1995, when Ford joined the company, years of customers and vendor confusion had finally caught up.
"They (customers) would order from J.C. Whitney and end up getting a box from Warshawsky Co.," he says. "We got in here and transitioned the Warshawsky customer base over to J.C. Whitney over a year-and-a-half, two-year time frame by putting both names on the catalog. Eventually, we just dropped the Warshawsky name off the catalog. I'm not sure why they didn't change it sooner."
The Warshawsky family owned the operation for 87 years before tiring of the business and selling 100 percent interest in the company to Riverside in 2002.
Says Ford, "Riverside bought J.C. Whitney with the strategy of making (it) a better business and using it as a platform for acquiring other automotive-related direct marketers."
It was a drastically different approach for the company.
"The (Warshawsky) family had made a number of investments in the time period from '95 to 2001, and they had become weary of making more emotional investments in J.C. Whitney," Ford says. "There was a little bit of a holding back on what we could do with the resources we had. When Riverside came in, all those barriers to do more things, like acquire other companies, opened up."
Riverside moved quickly, first creating ASAP as the consumer-direct automotive aftermarket accessories platform. The holding company then acquired Stylin' Concepts and Carparts.com to supplement the well-entrenched J.C. Whitney.
"Those management teams have created a relationship with their customers that is unique and distinct," Ford says. "We don't want to disrupt that. In order to maintain that unique relationship and to keep the management teams in the different business units that are added on motivated and focused, we've decided to have everything acquired through the ASAP holding company."
To understand how Ford operates J.C. Whitney, it's important to understand how ASAP is structured. J.C. Whitney provides accessories and parts for nearly all American-made vehicles and a few of the more popular imports. Stylin' Concepts serves the sport truck, street truck and SUV accessories market, and Carparts.com services the repair and replacement parts market.
Carparts.com is almost 100 percent Web-based, while J.C. Whitney and Stylin' Concepts market through catalogs, consumer magazines and the Internet.
"One of the things that we realized was that in looking at any other company to add on, the things we're looking for are complementary product lines, complementary customers, a somewhat unique way of marketing to those customers and a strong, proven, capable management team," says Ford.
Among the three business units within ASAP, there are well over 200,000 part numbers, which satisfy more than 4 million applications. Some parts satisfy multiple makes, models and years.
While Riverside transformed J.C. Whitney's business approach, Ford realized the company's physical needs had outstripped its location.
"We were originally located in a Chicago metropolitan area warehouse and call center," Ford says. "They were multistory facilities and they were not conducive for receiving, maintaining and pick-packing automotive products. We tried a few things over the course of about a year to modify the facilities to see if we could get some productivity improvements. We couldn't get any tangible benefits for our customers in those facilities.
"The old facilities were not built for a direct mail operation. They were built for manufacturing and regular office space. Direct mail distribution and call centers are a different animal than what those facilities were built for. We just couldn't modify them enough to get those productivity gains."
After trying to negotiate with the city and getting little response, Ford began working with the state of Illinois and the county of LaSalle and was able to get some tax relief. The company built a 340,000-square-foot facility that offers many benefits the old site couldn't.
"We've been able to cut our distribution center costs -- where we receive, store, pick, pack and ship -- somewhere in the neighborhood of 60 to 65 percent," Ford says.
Though J.C. Whitney traces its roots back nearly nine decades, it has fully embraced modern business practices. It counts more than 200,000 products in its line and lists about 90,000 products in its various catalogs, but keeps only about 50,000 products on hand at its warehouse. All of its products are listed on the Internet, and because of the relationships it has with more than 1,200 vendors, it can get even those products it does not keep on hand to customers within a couple of days.
"(The Internet) has changed things in a lot of ways," Ford says. "It's sped up our abilities to get new products out in front of our customers. Where it used to take us months to present a new product, now it takes literally days, weeks at most. We have the ability to update the information we provide to our customers about the product on a shorter cycle time. We also can present more information about our products than you can in the print catalog and you can carry more products.
"The other thing the Internet has done, it has allowed us a different channel for marketing to customers," Ford says. "Whereas before we had just the catalog to mail out to people, now we have e-mail programs, we have affiliate programs,where we hook up with other automotive-related Web sites, and if they send us traffic that ends in an order, we pay them a commission.
"They're like outside sales reps for us on the Internet. We also work with the major search engines to get placement on their sites when people search on things like weather stripping or door handles or mufflers. The Internet has allowed those three new marketing channels for us."
Riding economic cycles
As powerful as technology has been for J.C. Whitney, it has not immunized it from fluctuations in the economy.
"We do well in slow economic times, but we also do well in good economic times because people want to accessorize their vehicles more," Ford says. "Where we don't do real well is in those transitional periods, where the economy is softening and people are unsure, or on the flip side, where the economy is improving and people aren't sure -- (when) they're not sure whether or not they want to keep their car and fix it up or sell it and buy a new one.
"What happens then is they don't do anything until they decide that. Depending what they want to do with their car will drive what happens with us. If they keep the car, then maybe they'll buy more replacement and upgrade things. If they buy a new car, then they're usually looking to accessorize it with things they just didn't want to have the dealer do."
So as a market indicator, what is business saying about the economy?
"Things are starting to improve on our front, which is a little bit of a lag to the overall economy," Ford says. "Now what we haven't seen is the big jump in employment, which gives people a comfort, and then they start deciding what they'll do. That's what we're waiting to see. It definitely isn't getting any worse.
"People are, at least right now, thinking their employment is safe, and they are starting to either buy new cars or fix up their old ones."
Ford says there is enormous opportunity to expand the $200 million a year operation.
"We think there's close to $40 billion a year consumed in automotive aftermarket parts and accessories," he says. "If people got serious about maintaining their cars, it could go up by another $60 billion. The industry estimates that there's a $60 billion gap in unperformed maintenance on vehicles every year."
Ford sees an opportunity for J.C. Whitney and ASAP to snatch as much of that as possible.
"Some of the growth areas that we've seen and will continue to investigate are in the truck enthusiast and the off-road enthusiast, people that want to take their vehicle -- bike, truck or car -- off-road," he says. "Our focus is really on automotive enthusiasts, as opposed to people that are just driving their cars. There are about 200 million vehicles out there on the road. Not everyone is an enthusiast.
"We estimate that there is somewhere in the neighborhood of about 50 million people in the United States that consider themselves (do-it-yourselfers). Whether they're enthusiasts or people trying to keep their cars running, we don't know. We want to satisfy both, but our real focus is on people who are enthusiastic about it." How to reach: J.C. Whitney, (800) 529-4486 or
The education system in Bekkers' native Holland is somewhat different than in the United States. While American children are just trying to figure out the opposite sex, pre-teens in Holland are given three choices -- they may opt for trade, professional or business school. Bekkers selected the business program.
"You don't have as many choices," says Bekkers, president and CEO of Gold Kist Inc. "Here, you go to high school and you can choose your subjects. Over there, most all your subjects are academic; you go to school six days a week rather than five. It was much more intense than it is here."
His choice would lead him to places he never expected to go, such as the top post at Gold Kist, the only cooperative chicken company in the United States.
Bekkers' interest in Gold Kist began as a consultant, when the company was one of his clients. Over the years, he'd been offered many positions with the various enterprises with which he'd worked for as a consultant and had always turned them down. But in 1985 -- two years after becoming a U.S. citizen -- tired of the traveling and of having his children grow up without him, Bekkers accepted a position with the poultry company.
"When Gold Kist asked me to become part of their management team," he says, "I accepted that and really, in a sense, did the exact same thing for a couple of years, which was (serve as) an internal consultant to improve productivity and profitability in the company. When they made me that offer, I jumped on it and knew that I wanted to be part of this company."
Gold Kist processes 14 million chickens a week in an industry that processes 165 million chickens every seven days. Its products are labeled under the Gold Kist Farms brand name and the private labels of many supermarkets. Its chicken is also served at fast food chains and full-service restaurants, as part of school lunches and in many frozen meals.
Gold Kist got its start 71 years ago as an agribusiness. And while everything from the growing of chickens to their processing and distribution has been changed by technology since then, the principles that drive the company have not.
"The fundamentals in business remain the same," Bekkers says. "I don't care whether you did that 100 years ago. If you manage a business for longevity, for sustainability, you have to take into consideration who your stakeholders are. It has to be in the best interest of all your stakeholders -- suppliers, employees, customers and the communities that we serve. All of those come into play.
"So many times businesses are run for the benefit of just one -- the shareholder. Don't get me wrong, you've got to manage for the shareholder, but you can't do it at the expense of the others. From a sustainability standpoint, you definitely have to manage where all four of those benefit."
But to listen to Bekkers explain it, the biggest beneficiary may be him.
"It's turned out even better than I thought it would," he says. "Look where I finally ended up. I never had any aspirations to do this. I just wanted to contribute. When you're a consultant, you get to tell people what to do, but once you have been four to six months on a particular project, then you move on. You never really see all the fruits of your labor.
"Implementing some of those things, staying there and seeing the results, is very gratifying. I wanted that opportunity to manage a facility, to manage a company rather than telling people how to do it."
The things he learned as a consultant led Bekkers to focus the company, a collection of more than 2,300 cooperative member-owners, on its core principles.
"We are a cooperative," says Bekkers, "so we manage our business for the economic well-being of our cooperative members who are the equity holders of the company."
Focus on the core
Over seven decades of operation, Gold Kist has delved into a variety of products, among them cotton, poultry, processing plants, a fertilizer plant, animal feeds, peanuts, pecans and catfish. Today, it is almost entirely focused on chickens.
"In 1999, we decided row crop agriculture, which is really where Gold Kist got its start in 1933, was something that was not our core business any more," says Bekkers. "Poultry had become our core business. If you looked at our total revenue, which was around $2.4 billion, about $1.9 billion of that was poultry.
"We looked at the performance of all our assets. Certainly those (nonpoultry) assets weren't performing at nearly the level as poultry was. We decided to focus on our core business, to commit all of our resources to our core business."
Today, the company's holdings are nearly 100 percent chicken-related, with a small interest in contract rolling hogs. It has nine divisions, which include 11 processing plants, 18 hatcheries, 11 feed mills, eight distribution centers and three byproduct plants.
"We are now starting to see the results of improved performance in our poultry company from a productivity standpoint," Bekkers says. "That's because we're focusing all of our energies on being one of the best companies in the industry. Before, we had to divert our attention to a lot of those other assets that really weren't giving us much return.
"We're pretty well pleased with the results that we're getting out of those efforts that we started about six years ago."
Seeing the results of his efforts is a benefit Bekkers was denied during his days as a consultant.
"The main difference is a consultant is there for a short period of time," Bekkers says. "They speed up a process that you were most likely going to do anyway. On the other side, you get to implement. You live by your decisions. You're there and you see the results, whether they're negative or positive.
"You react to those decisions and you adjust to them. Consultants, they're in or out, and you're there for the long term."
Lead from within
Despite his success on the outside looking in, Bekkers did not move directly from consultant to the company's top spot. First, he managed managed Gold Kist's largest poultry production and processing operations at Boaz and Guntersville, Ala., then served as director of management systems for its poultry business.
"It was great experience," he says. "I went from consulting -- managing my own business, which had a limited number of employees -- to all of a sudden managing a division of about $250 million in sales and about 2,800 employees. I already understood the operations, I already understood the business because of the consulting side, but to manage that many people was something new to me. That was an experience that was very valuable."
In 1995, Bekkers was named president and COO. Six years later, in July 2001, he was elected president and CEO. Since then, he has worked to maintain the culture that drew him to the company in the first place.
"Gold Kist is a company of great culture and great purpose," he says. "One of the things that we pride ourselves on is that our employees have many years of service with the company. We still are the old, traditional company -- you start with the company, you retire with the company."
Bekkers strives to ensure that culture is maintained.
"A lot of companies put up signs -- 'We're team members and we do this or we do that,' but I think it ultimately comes down to whether you walk the walk and talk the talk," he says. "That's what we do in our own way. We don't go around and publish it all. We don't put up signs. We just have a very open culture.
"My office is always open; anybody can walk in at any time, and say, 'You got a minute? I've got a problem.' I think that is the way it is with just about all of our VPs and all of our managers.
"We're not out there every day telling somebody what to do, how to do their job. We firmly believe that when people come to work every day, they want to do a good job. I've never met too many people that come to work every day and say, 'What can I screw up today?' There are just not that many people out there."
The company also offers other ways for employees to connect.
"We still have a devotional service on Wednesday mornings, not that everybody is overly religious, but we allow people for half an hour to bring in a speaker or a minister of their choice," he says. "We're a very traditional company when it comes to that. To really, truly believe in our employees, and that they play an important part in the success of our company, if there is anything you would take away from that, that's what I'm the proudest of -- the kind of culture that we have and the service that we provide to all of our stakeholders." How to reach: Gold Kist Inc., (770) 393-5000 or www.goldkist.com
The second-hardest thing about buying a computer is watching the price drop, even as youre taking it out of the box. The hardest thing is getting used the fact that once you buy a computer, your technology expenses and decisions will never end.
When do we upgrade? How cutting edge do we need to be? Do we need the latest version or a new version of the software?
Attorneys at the firm of Brouse & McDowell have answered those questions. Staying up-to-date is a vital part of the competitive strategy but so is managing the cost of doing so. Heres how they do it.
Making the commitment
Staying cutting edge requires money. Brouse & McDowell, which is headquartered in Akron but has an office in Cleveland, allocates roughly $500,000 a year less than 3 percent of the operating budget to update office technology. It seems like a big expense, but the firms leadership recognizes that the costs of technology simply cant be eliminated.
All 70 attorneys, plus many key staff members, use computers. One-third of those machines are replaced every year, and about two years ago, the firm decided to move from desktops to laptops in most cases.
All but the newest members of the firm (who will join this fall) will have laptops on their desks, says Carol Todd Thomas, director of administration. She calls laptops the new legal pad.
We try to stay with the latest versions of all the core programs that we support, Thomas says. Additional programs we evaluate constantly. We look to see if we can get value and efficiency and benefit from those programs, and thats really what we look for in evaluating them.
The firm has a group that examines new software, but Thomas encourages attorneys to seek new applications and explore new ways to use old software.
My philosophy has always been: If the client says Can you do something? our answer is always yes, because we want to be enough ahead of whats going on in that area of technology that we can be responsive to whatever our clients need, Thomas says. And well get requests from time to time for example, (to) electronically send them their bill. No problem.
Staffing for support
Brouse & McDowells commitment to technology is not limited to computers and software. The creation of Web sites, intranets, extranets and, Thomas pet project, a virtual law library, required a team of information specialists.
Brouse employs four specialists full time. Reporting to Thomas, they manage the network, provide support, take care of the hardware and, perhaps most important, provide training.
Just about everyone can draft a document through Microsoft Word or WordPerfect, but regular classes are held to update people on the powerful features added with each generation of the software.
An increase in the IS department isnt the only staffing change, Thomas says. Before computers, the firm employed a secretary for every two lawyers. Now, with computers allowing them to do more of their own research, the ratio has dropped to roughly one secretary for every three lawyers.
The benefit of that has been more information at a lower cost, Thomas says. Weve been able to pass those savings on to our clients. We dont charge our clients for out-of-pocket expenses. They dont get a bill for legal research. They dont get a bill for copying or faxing or postage. We are able to have enough efficiencies built through our use of the technology and through electronic means of communication that we pass the benefit onto our clients.
Slowing the pace of progress
There can be a tendency to latch on to the latest toy. When that happens, Thomas says, it can hinder the flow of information.
Theres always that balance between Are we really going to do something with this, or is it just kind of a toy? Weve had our share of lawyers going out and buying the little Palm Pilots and things like that and not really finding theyre that beneficial to them. Theyre more trouble than a hard calendar.
Thats not wasted time, Thomas says. Its a learning experience.
According to Lori Berenson, president of Berenson Consulting in Euclid, companies dont need to jump on the latest version of every program.
Unless we happen to know that its bug free, which hardly ever happens, we will recommend that they wait a little bit, maybe three to six months depending on how badly they need the new features, she says.
Berenson does recommend purchasing the software patches that fix bugs in operating systems, but to hold off for six months to a year on the latest OS version until most of the kinks are worked out.
The next step
Brouse is currently implementing teleconferencing equipment companywide. Thomas expects the next step will be to take technology into the courtroom.
Cost has some clients balking at the thought of a trial. The use of technology can lower that expense, Thomas says.
Youre never fully implemented. Things are changing too fast, she says. Were always looking to be ahead of the curve, but not so far ahead that were spending money foolishly or not getting our value out of it.
When Gary Vaccariello first considered mailing a survey to his customers to gauge satisfaction and get a read on their business plans, he was told to expect a response rate of 30 to 40 percent.
For Vaccariello, that wasnt good enough. Ive got to know what my customers are going to do, so I can forecast what my goals are for the next year, says the owner of Willoughby Hills-based Corporate Electronic Stationery, which sells paper, printing and promotional products. If I dont know what theyre doing, theres no way I can figure out what Im going to do or what I should focus on.
Vaccariello sent out the survey, and the response rate, he says, is 85 to 90 percent.
The survey is four pages and takes less than 30 minutes. To overcome resistance, Vaccariello starts with a bribe.
I send out the evaluation with two movie tickets, he says. Not a big deal. While he declines to say precisely how much he spends per ticket, he buys them by the bundle at a discount.
For customers who still dont fill it out, Vaccariello gently prods with a phone call.
I dont believe in just sending something out and not calling them on it. Ive got some responses back within 48 hours or less from some people. And some took almost a month. But they told me, Gary, I cant do it right now. Its months end. Im doing something. Im booked. I cant get it to you. Can you wait? Can we do it some other time?
One phone call is usually enough.
Vaccariello has made the survey a regular practice, so his customers are in the habit of responding.
The biggest thing thats helped me learn more about the accounts, or what I call taking their temperature, is by doing this every six months. It cost me like 400, 500 bucks to mail them out, including the tickets and so forth. But at least it gives me a real good overview of that customer. It also gives me another chance to go in and talk to them.
Even after direct contact, though, some customers still dont respond. Thats where Vaccariello draws the fine line between being persistent and being a nuisance.
Theres a few people, like anything else. You think youre going to get it, but they never do, even though you talk to them.
But they still get to see a movie.
How to reach: CES (440) 942-1230
Some of the best employees youll never hire are wishing they could work for you. They cant, or more accurately, they wont, because they have chosen the role of stay-at-home parent over that of employee.
Hudson-based toy manufacturer Little Tikes may have found a solution one that gets the best workers on the payroll, keeps concerned parents near their children and even produced a natural product testing department. Little Tikes has an on-site day care center.
I think its the perspective the Little Tikes company has this benefit, says J. Scott Silver, vice president of human resources. They do provide it, and I think it gives people the perspective were more in the front out there leading other companies in terms of what we offer our associates.
Its interesting to watch visitors when we take them down into the plant or walk them around the building, and then they see the day care center, Silver says. Being a toy manufacturer, its a lift just to show people the kind of products that you make. And its an additional lift when they actually see kids; and they see the playground; and they see our toys out there. It just provides a more favorable environment.
The company supplements 30 percent of the day care, says Jodi Grawunder, the administrator and a teacher in the program. For that reason, teachers tend be better paid and have a longer tenure.
We dont have a high turnover like other child care centers. (They) might have a high turnover just because they have a hard time paying their teachers well, she says.
The children must be potty trained and can remain in the program until they enter kindergarten.
Having the center on the ground of the Little Tikes facility makes employees more comfortable. They often visit their children at snack or lunch times, and if there is ever any worry, a parent is right there. According to Grawunder, employees without children occasionally visit the center and just watch the kids for awhile. It kinds of brings them back to reality why were here what Little Tikes is all about.
There are 60 to 80 parents waiting to get their children into the program some who arent even born yet, Grawunder says. Once they learn they are pregnant, mothers often sign up. The wait can be as long as a year and a half, and at one time, it approached three years. Grawunder keeps them on the list until their children are old enough to enter the program.
Teacher Janet Quinn, a 7-1/2 year veteran of the program, applauds the company for its effort. Were proud to be here. Im proud to work for a company that would support child care. Very few companies back corporate child care centers.
Quinn has seen appreciation in the parents.
Ive had many of them tell me that that was one of the greatest benefits of working here, she says. Ive had parents that left here to go to another job that waited to leave until their child went to kindergarten, or until they were through with the program, because they so enjoyed being able to bring their child to work with them.
Of course, the corporate motive is not entirely selfless. The company does put the children to work. Whenever engineers or designers want a kids-eye view of new toy, they give the day care center a call. The 20-plus children eagerly volunteer to run, jump, throw, swing, slide, sit on, rock or crawl through a toy which has yet to cover the shelves of your local toy store.
Often several times a week, designers bring in toys to check on the age appropriateness or how a child plays with the product, Grawunder says.
While Little Tikes does get some practical use from the day care center, the advantage is in the good will it inspires.
It means everything to me, says Lisa Bouplon, an executive secretary in the human resources department. Its the best benefit that a company could offer. I dont feel that Im separated all day.
Businesses have been fleeing the inner city as quickly as the suburbs can pass 20-year tax abatements. But there have been a few stalwarts, business that lie snugly in and immediately around their downtown. Inc. magazine recently ranked the 100 fastest growing companies, and six Cleveland companies made the cut.
Thermagon was the highest ranked local company at sixth. President Carol Latham, a 1998 Entrepreneur Of The Year winner (SBN July 1998), had 2,662 percent sales growth between 1993 and 1997. Thermagon manufactures thermal conductive materials for electronic devices.
In describing Lathams accomplishments EOY Director Ed Eliopolous explained what separates entrepreneurs from other business owners.
She did it in a very nontraditional sense, he says. She was not able to borrow bank money. She did it in an area that nobody would move a business into and she did it with employees that most people would not even want to interview.
Complete Payroll Management Inc. came in 26th with 384 percent sales growth. CPM moved to its Carnegie Avenue location in November 1997. CPM began as staffing solutions company Minutemen before branching out into the payroll processing field.
Theres a commitment on part of the Minutemen group to the inner city and Inc. magazine recognized that by redeveloping a historic plot of land in the inner city, Minuteman revitalized almost an entire city block, says Michael Settonni, director of marketing for CPM. What was an eyesore for 10 years along Carnegie Avenue is now a beautiful corporate center.
The location offers several benefits.
At the time it was much more economical than going out to the suburbs, says CPM Vice President Jay Lucarelli. We feel were at the center of everything. We have access to go in just about every direction; it just make things more convenient.
According to Settonni, Minutemen, for a long time, has been a real anchor in the Midtown Corridor, active with the Midtown Corridor Association, and an example to other businesses how you can come down here, (and) do business.
ColorMatrix, profiled in SBN in November 1997, earned the 37th spot with 245 percent growth. The company manufactures liquid color concentrates for the plastics industry. Also included in the top 100 inner city businesses were No. 50 Ullman Electric, a electrical contracting services provider with 162 percent growth; No. 73 Talan Products, which contracts manufacturing and metal stamping with 123 percent growth; and No. 99 Even Cut Abrasive, a manufacturer of abrasive specialty products with 74 percent growth.
Business is a lot like life. Not everyone begins on a level playing field. Some entrepreneurs take established companies and turn their empires into rubble. Others struggle to scrape together the most meager of financing and turn an idea into an empire.
Simply put, it’s not where you start; it’s where you end up and how you got there.
Sometimes the most successful path is the one least trodden, the one lined with thorns, pitfalls and other nasty risks.
That’s why, every year, as part of the Entrepreneur Of The Year program, Ernst & Young LLP looks at how Northeast Ohio companies got where they are today. Judges examine not only how successful the company has become, but what risks its leaders took to reach that success.
As Judge Ralph M. Della Ratta Jr. put it, “The winners were very tenacious people unbridled entrepreneurs. The success was very discernable. They were able to motivate their employees to a very great extent, and get the most out of their management team and all employees in the company. There are just a lot of intangibles that are hard to articulate.
“It’s like good service; it’s hard to describe, but you know it when you see it and when you receive it. They were just very impressive people and it shone through. Their entrepreneurial spirit certainly shone through.”
The Entrepreneur Of The Year program began months ago when scores of companies were nominated for the honor. A rigorous elimination process narrowed the field to the elite 20. The judges visited the companies and interviewed each nominee, then debated the merits of each applicant. It wasn’t an easy decision.
“All the finalists should be winners,” says EOY Judge Diann Rucki. “(It was) very tough to try and judge which of these companies should be the ones to actually accept the award. They are all most deserving.”
The 1999 class of winners illustrates the diversity that makes this area an exceptional place to start a business, no matter what the industry. And, as Northeast Ohio prepares to enter the millennium, it’s becoming more evident that the region has become a virtual hotbed for entrepreneurs.
The winners were announced June 22 at a banquet at the Cleveland Renaissance Hotel. They represent a cross-section of the area’s brightest entrepreneurial talent.
SBN spoke with each of the winners and finalists, and presents their extraordinary stories.
SBN is a proud sponsor of Ernst & Young LLP’s Entrepreneur Of The Year program. This story was independently reported by the SBN staff and was not subject to prior review or approval by Ernst & Young or any other Entrepreneur Of The Year partner.
Its hard to listen to anyone discuss world trade without hearing strains of Its a Small World. International business accounts for 32 percent of our economy, and the greatest growth in export sales is coming from smaller to mid-sized companies, says Darin P. Narayana, president of Bank One International Corp.
Some of those companies are experiencing 10, 12, 15 percent growth rates, Narayana says. The last two years were very interesting. [That is] when the so-called globalization concept was tested.
More important, it was proven correct. Client access is the greatest phenomenon of modern times access to products. You can buy them anywhere, from anywhere and ship them anywhere, he says. That access gives you enormous marketing power and a bigger market.
With so much opportunity, the question company executives are asking isnt, Should I export? its How? or Where?
SBN sat down with Narayana to explore the fast and roughshod world of global business.
Many companies are content to fill their niche. Why should they get involved in export?
The march of globalization is a new phenomenon. American exporters from Ohio and other markets are coping with all the changes, plus Y2K. What were trying to do is to make sense out of this and tell them what some of the best practices are were seeing from companies that have been able to sustain export momentum. People have a yearning to separate news from information. Theres a lot of news out there, but very little information. For example, they hear that Brazil is going through problems. But what does it mean to me as an exporter?
One of the reasons to go overseas is to protect your product and be sharp. The competitor that is going to kill you is one you dont know. If companies dont go abroad, foreign companies may come here. And the next thing you know, you dont know what hit you. Theres no place to hide anymore.
With so much opportunity, why are some companies reluctant to export?
In the last few years, weve been put through the wringer with emerging market crises. Countries we thought were tigers became tame in Asia. We thought Hong Kong was a pretty safe country, but it got hit hard by currency markets. And when Russia got into trouble, which was no surprise to any of us, it affected the real in Brazil, which has no relation to Russia.
So are there still opportunities for companies to develop or maintain exports?
More so than ever before. One of the lessons of the recent crises is that if countries dont open up their economies, and if countries dont follow sound economic policies, they will be hit very hard by market forces. Why should they be vulnerable? Very simply, the emerging markets of the world desperately need capital, because they have no more aid coming from either the United States or the Soviet Union. They need investments. Thats the only way theyre going to get competitive in the world markets and survive.
The only game left in town is the game of job creation through economic growth and international trade. For countries to get that kind of job growth, they need competitive industries. For them to have competitive industries, they need to invest in infrastructure. The only way to get that is through investments. But the only way to get investments is to show the world that they mean business, that they have sound economic policies, sound currency policies and a good banking system. That is what everybody is trying to do.
American exporters have an unbelievable opportunity to sell to countries product and equipment that enables those countries to get more productive and competitive. We have the equipment, and we have the infrastructure development capability.
You mentioned crises in different markets. How can business owners deal with the turmoil that may emerge while theyre trying to invest in foreign countries.?
For companies that are already exporting, we recommend five steps:
1. Examine the markets that offer you a sustained level of sales and make commitments to those markets.
2. Identify financial strategies that minimize risk to your company and maximize cash flow.
3. Identify risks, such as payment risks and currency risks, and align yourself with an institution that can help you manage those risks.
4. Establish a beachhead in each of the major economic zones of the world
5. Be open to investing in small countries. Most companies go through the following cycle: They export directly. Then they invest in that country, and they export even more.
What role does e-commerce play in exporting?
In the Internet economy today, distribution is more important than manufacturing. Distribution strategies are a lot more critical than manufacturing. So, be open to alternative channels of distribution and selling. Foreigners are using the Internet a lot more.
Theres no place to hide anymore in an Internet economy, so you may as well come right out, see the world and be prepared for it. The Internet will be the phenomenon that will change the way we buy, sell and live
What are some of the common pitfalls that companies just starting out with exporting experience?
The major mistake they make is not having a plan. Its mostly reactive. Companies that are reactive to exporting are companies that are prone to problems. For example, youve got an order from Mexico and the guy says, What is this letter of credit business? Just send it to me, Ill pay you. You say fine. You have essentially created bad debt. If you checked out the customer, maybe he is good; maybe he doesnt need the letter. But there is no plan. You suddenly scramble because you want to sell; youve got an order. You start to scramble, thats when you make dumb mistakes.
Some companies lack understanding of how markets work, like selling to Russia in rubles. The ruble is worthless, yet some countries sell to Russia in rubles thinking its still a sale. They think, I can convert rubles. Good luck.
They also go with the wrong people. Sometimes its better not to sell than to sell to the wrong people.
What does the future hold?
I think in 1999, Ohio will probably see a 3 to 5 percent export growth. What youll see is an incredible churning of industries. Across Europe, companies are buying each other. Theyre coming over and buying companies here. Were going and buying companies there. So youll see cross-border mergers going up. Walls of trade restrictions will rapidly be coming down, and you will also see greater currency alignment. I think that youll see much more rapid economic business cycle, and each cycle will be much steeper than the other ones. But the recovery will be much faster.
The changes are going to be so incredibly rapid that companies must have a context to understand them. There are some fundamentals that dont change you have to sell to your strength, youve got to have a good product, good high quality, competitively manufacture (and) have good value.
The world in a nutshell
Bank One International Corp. President Darin P. Narayana gives a thumbnail sketch of export opportunities in markets around the world.
Emerging countries need capital, desperately need capital, Narayana says. The reason they need the capital is that they realize for them to survive and create jobs in their country, they need to have a strong infrastructure. They need to have competitive industry. They need to be able to transport.
To do that, they need investment. They need tons of investment. To attract investment, these countries have got to pretty themselves. The countries that have not done those things were clobb ered by investors in the last few years.
These countries went through very rough times. When they did, there were two ways they could have gone. One way is to say its George Soros fault. Its the American Jewish investors fault, which is what Malaysia said. Its everybodys fault, but our own. And therefore were not going to change.
All the other countries said, Youre right, we have corrupt banking systems. Our foreign debt is too high. Youre right, we have a lousy currency policy. And youre right, we need to clean up our act and get (with) the program. These countries have adopted the IMF program, and they have turned around very fast.
Indonesia is one of the countries that is rapidly disintegrating because basically the foundation of the country has fallen apart, Narayana says. And it has serious problems, with not a single Indonesian country being solvent today.
Singapore is great, as always.
Thailand is an interesting story, says Narayana. Thailand had a very corrupt economy, a lousy banking system and enormous external debt. Thailand said OK, we give up. We made a mistake. What should we do? So Thailand is one of the best markets for American exporters and investors. Its remarkable how much investment is going into Thailand today.
Everything is good, except the neighborhood is lousy. Its next to China. And its next to Thailand. So it got killed in the process, because people were testing Hong Kong to see if it would maintain the strength of their currency vis-À-vis the U.S. dollar. I dont think anybody should worry about Hong Kong.
To me, its one of the biggest risk points well look at. China is trying to globalize. Its billion people need the economy to grow about 12 percent per annum for China to be able to make people happy. The only way they can grow at 12 percent is to become an export machine. China is trying to introduce economic policies to make the (more than 200,000) government-owned companies go away.
Japan is an interesting problem in that it is a problem that wont go away, Narayana explains. Japans economy has been in recession for too long. It doesnt seem to get any better.
The reason Japan is in trouble, the fundamental reason is, Japan is a closed economy, a closed society. The banking system stinks. Twenty percent of bank assets are nonperforming assets. You and Id get shut down in a second if we had that problem.
Russia is in a league by itself. Ive never seen a more shallow economy in my life. Russia is a dysfunctional society. Theres nothing there. Theres no central bank. Theres no judicial system.
Health care facilities have long been a part of van Dijk Pace Westlake Architects, but no one knew quite how deeply the specialty was ingrained in the firms history until someone uncovered some long lost materials.
When we were moving our offices from the Warehouse District to this building, we found a book of specifications for University Hospital that was dated 1908, says Paul E. Westlake, a principal of the firm. Specifications are one of the last acts of documentation after youve designed the building and performed your construction drawings so that project probably was commissioned in 1906 or 1907.
Since the firm was founded in 1905 by Abraham Garfield, son of U.S. President James Garfield, one could argue that the firms experience with health care started with its founding.
Van Dijk designs all types of buildings, but health care and cultural facilities are its specialty. It has partnerships with major Cleveland health care institutions such as the Cleveland Clinic Foundation, University Hospitals and Metro Health Medical Center.
Says Westlake, As long as we have been practicing and those institutions have been in existence, weve been working with them. They have developed architecture thats unique to their research or protocols.
That experience has vaulted van Dijk to the forefront of health care architecture, and to a number of firsts: The firm designed the first cardiac catheterization suite, as well as the first kidney dialysis facility.
Its also learned the importance of planning. With the high cost of health care the equipment that fills a room can cost more than the building that surrounds it both clients and the firm must keep finances in mind.
Its a delicate balancing act, says Westlake, keeping costs down while providing the utmost in patient care.
We find our health care clients to be extremely cost conscious from a standpoint of efficiency of operations, he says. But at the same time, they try to maintain a fairly high quality of environment.
A lot of our focus in planning and programming may have to do with finding a system of organization that maximizes the use of a piece of equipment, or that minimizes duplication of an expensive piece of equipment. Its clearly a very specialized project.
While money is always a significant factor, Westlake says health care facilities are more interested in patient care. And theyve been paying more attention to the surroundings and their influence on patients.
That has to do with comfort and convenience, and a kind of visually satisfying and psychologically satisfying environment in which to receive those services, Westlake says. The bar has been raised significantly for design. And I think design is a marketing tool now for medical facilities, as it is for retail and hospitality environments.
The new facilities are designed to provide a lot of dignity for the patient. Its a different paradigm. You go to the retail paradigm because its decidedly noninstitutional. Its designed to allure and attract, and make you feel comfortable. The retail spaces are often favorite spaces in the community. And hospitals are looking to that as models. They want spaces that people enjoy, that feel welcoming and are very pleasant and delightful.
The lessons they have learned translate into other areas of architecture as well.
One of the problems is that many architects act more like druggists than they do doctors, he says. They tend to fill the prescription of needs that are dictated by their clients, rather than analyzing whats wrong with the patient and coming up with a solution.
Westlake says some architecture firms simply do whatever the clients asks without considering the full ramifications. If a hospital increases the size of its emergency room, for example, what effect will that have on the cardiology unit or radiology? What effect will it have on maintenance or food service?
You need to understand the effect of any change in one department on the whole system, he says. Our approach is more to try and make a diagnosis by testing a number of things and making hypotheses and try to prove those out. And then at that point prescribing a solution.
The ability to treat the whole facility while doing a project is one of the things that separates van Dijk from other architectural firms, Westlake says.
One of the things that our firm does that is highly differentiating and unusual for architectural firms is that we do have in-house programming capability, he says. Were in a position to perform those needs assessments on behalf of our clients. You have to understand the organism is entirely dynamic. You see a change, you provide for that change physically by arranging space.
Thats never the end game. Its just part of the continuum of the development or change of an institution. How to reach: van Dijk Pace Westlake Architects, (216) 522-1357, or www.vpwa.com
Daniel G. Jacobs (email@example.com) is senior editor at SBN.